Đức Giang-Lào Cai Chemicals JSC plans to issue convertible bonds and shares worth VNĐ833.8 billion (US$37 million) in 2017 to merge with Lào Cai Chemical Fertilisers JSC and Bảo Thắng Chemicals. — Photo cafef.vn

HÀ NỘI — Đức Giang-Lào Cai Chemicals JSC plans to issue convertible bonds and shares worth VNĐ833.8 billion (US$37 million) in 2017 to merge with Lào Cai Chemical Fertilisers JSC and Bảo Thắng Chemicals.

The deal is expected to help Đức Giang Chemicals and Detergent Powder JSC, the parent company of the three chemical firms, move closer to the acquisition of the three firms.

This year, Đức Giang-Lào Cai Chemicals will offer three million convertible bonds to current shareholders of the three companies. The bonds have a par value of VNĐ100,000, an annual yield rate of 2 per cent and a maturity rate of two years.

Shareholders will be able to convert those bonds into shares of Đức Giang-Lào Cai Chemicals at a ratio of 1:10 (each bond is equal to 10 shares) when the bonds come to maturity.

On the maturity date, bond interest will be paid in cash and the deposit will be transformed into shares for shareholders.

If the conversion takes place after Đức Giang-Lào Cai is merged with Đức Giang Chemicals and Detergent Powder, the original bonds will be transformed into shares of the later firm at the converting rate between the two companies.

Total money raised from bond issuance will be used as a part of investment in a VNĐ2 trillion, 100Mw thermal power plant project.

In addition, Đức Giang-Lào Cai Chemicals will offer 53.3 million shares, worth VNĐ533.8 billion, to convert shares of Lào Cai Chemical Fertilisers and Bảo Thắng Chemicals into its shares.

68.3 per cent of the shares will be issued for shareholders of Lào Cai Chemical Fertilisers to convert their shares into Đức Giang-Lào Cai Chemicals at a rate of 1:1, and the rest will be issued for shareholders to Bảo Thắng Chemicals at a conversion rate of 1:0.8.

After the bond and share issuance, new Đức Giang-Lào Cai Chemicals will be merged with Đức Giang Chemicals and Detergent Powder in the form of share conversion.

The M&A deal was approved by shareholders of Đức Giang Chemicals and Detergent Powder JSC at its annual shareholder meeting in April. The deal is expected to double the company’s chartered capital to VNĐ1 trillion. — VNS